One of our core philosophies is somewhat unorthodox, but it makes sense.
Money has no value on its own. It’s paper, with some special ink, and cotton. In today’s financial world, it might only be a number on a hard drive somewhere recording your account balance. If I have two pieces of paper, one being a one-hundred-dollar bill, and the other a blank sheet of paper upon which I hand-scrawled “$100,” the former has value and the other does not. What makes the difference between two materially similar items so dramatically different?
Some people would say its faith in the currency system, but it’s actually much more than that. Money is exactly as valuable as what it is used to accomplish. We might say that a bank account with $5000, has a nominal value, but $5000 that is used for something—to buy a boat, pay for a grandchild’s college, or drill a well in Africa, has functional value. Financial planning is the practice of connecting the functional value of your assets with their nominal value and then maximizing both.
As a result, one of the first steps in creating your financial plan is to identify the “functions” that are significant to you. These break down into two categories: quality of life and world impact. The quality of life are the self-oriented needs and desires you have. These are the basic questions that every financial planner would learn to ask in business school. “What are your basic monthly expenses?” “Do you plan to travel?” “Do you foresee any major expenses like starting a business or remodeling your home?” I call these self-oriented, but they are not selfish or un-important. These are the reasons most people have built up their assets, and a good financial plan will help you accomplish these and it will integrate them with your world impact.
The term “world impact,” isn’t necessarily as extreme as it sounds. People are fundamentally human, and we exist in the context of community. We cannot escape it, and we aren’t fully complete as people unless we participate in it. Our community is made up of our families, our neighborhoods, our towns, states, our country, and the global community. World impact, means impacting one or more of these areas. Each of us has a world impact, whether or not we choose it. When talking about your impact, it’s important to note that it is yours. Some of the things people do with their impact: help a grandchild pay for college, volunteer as a big brother or sister, sponsor a child with Compassion International, provide clean water to a remote village, start a business, teach a young person a trade, spend time with you kid so they know they are loved. These are all parts of significant world impact, and we all have unique parts to play.
Our financial plan either helps us accomplish these things, or hinders our ability to engage the world around us. A good financial planner will help reconcile the two so you are better equipped to live the life you were meant to live and will help you recognize the functional value of your assets. If the plan focuses on just one, then you’ll end up either living a lonely, lavish life, or playing catch-up because you weren’t prepared to fund your basic needs.
The Co|Create way is to create a future in which you can make the most of your quality of life and your world impact…together.